Venture capital – how to find the perfect partner to fund your business
Moving a great idea or invention from the concept to a tangible enterprise can take time, hard work and money. Early-stage financing like venture capital investment is an option to propel the concept forward, but it’s critical to find the right partner, experts say.
Those who believe they have a viable business idea need assistance to shift from aha moment to tangible enterprise. But how? Venture capital (VC) is one popular option.
VC is early-stage financing, often for start-ups. Entrepreneurs who may be interested in VC partners have significant capital costs and high-growth business plans.
The VC investors who partner up with start-ups often join and receive an equity stake in the company. This can come in different forms, such as securities and stocks, and terms are unique for every deal.
Find the right VC partner
Finding the right partner can be tricky. Just ask Steen Gunderson. He and two others recently bought out the head of Bouctouche Bay Industries, a New Brunswick-based aquacultural manufacturer. However, they needed a VC partner who understood their business model.
They had conversations with multiple possible partners.
“Everyone thinks banks,” Gunderson says. “Yes, obviously you need someone who has the banking facility and capability, but what you’re looking for is a partner – someone who will look after the business and understand the sector you’re in.”
Gunderson says it’s important to find a partner who understands the unique nature of a business and doesn’t suffer from the “paralysis analysis” with every single detail scrutinized as they struggle to understand.
Fast, fast, world
For Tamara Leigh, the CEO of EIO Diagnostics, an udder health company focused on mastitis prevention in dairy cows, navigating the foreign world of VC was like nothing she’d experienced before.
“The venture capital ecosystem is its own creature,” Leigh says. “It has its own language, culture and rules, as well.”
If you can articulate a clear vision and a solution to a compelling problem, you can move very, very quickly to get the funds you need to move forward.
The EIO idea was good. So good that the company was successful with its investor pitch at a VC accelerator program and a partner was secured before incorporation.
“In venture capital culture, the speed at which you can mobilize people and money around an idea is almost mind-numbing,” Leigh explains. “If you can articulate a clear vision and a solution to a compelling problem, you can move very, very quickly to get the funds you need to move forward.”
A key piece for Leigh and her team has been access to VCs’ extensive networks, which cover any aspect a CEO would ever want to tap into.
And the decision to accept VC investment was a logical decision to move her company forward. Leigh agrees with Gunderson and encourages anyone with a bright idea to find the right partner and never get into business with someone unless completely certain.
“You want to think critically for what you best want to achieve,” Leigh states. “Venture capital is one way to finance a company, but it will cost ownership and control in the long run. You have to figure out what your own goals are from a business and personal perspective ahead of having the conversation with venture capitalists.”
Moving a great idea or invention from the concept to a tangible enterprise can take time, hard work and money. Early-stage financing like venture capital investment is an option to propel the concept forward, but it’s critical to find the right partner, experts say. Find a venture capitalist who understands the sector. Then, think critically to establish business and personal goals.
Article by: Trevor Bacque